The Egyptian Income Tax Brackets and Rates
Under Article 8 of Egyptian Income Tax Law No. 91 of 2005, income tax for natural persons is calculated using the following progressive brackets:
| Annual Net Income (EGP) | Tax Rate | |---|---| | Up to 5,000 | 0% (exempt threshold) | | More than 5,000 up to 20,000 | 10% | | More than 20,000 up to 40,000 | 15% | | More than 40,000 | 20% |
Importantly, Article 7 states that tax is only due on income in excess of EGP 5,000 per year for resident taxpayers. This means the first EGP 5,000 of your annual net income is not taxed at all.
When calculating your tax, total annual net income is rounded down to the nearest ten Egyptian pounds before the rates are applied.
The Personal Exemption
Beyond the zero-rate threshold, Article 13 provides a further annual personal exemption of EGP 4,000 for every taxpayer. This amount is deducted from your gross income before tax is calculated, reducing your taxable base.
Additional exemptions under Article 13 include:
- Social insurance contributions deducted under Egyptian social insurance laws or equivalent foreign schemes
- Life insurance premiums paid for yourself or your spouse, up to certain limits
- Health insurance premiums under certain conditions
For expats who contribute to a foreign social insurance or pension scheme, it is worth seeking advice on whether those contributions qualify for deduction under this article.
Income That Is Completely Exempt from Tax
Article 12 specifically exempts the following from income tax:
- Pensions: If you receive a pension, whether from an Egyptian or potentially a foreign source, this is not subject to Egyptian income tax.
- Severance allowances: End-of-service gratuity payments are also exempt.
These exemptions are particularly relevant for expats who may be receiving pension income from their home country while living in Egypt, or who receive a lump-sum payment upon leaving employment.
How Tax Is Applied to Your Salary
Under Article 9, taxable employment income includes essentially everything your employer pays you — not just your base salary. This includes:
- Bonuses, commissions, and incentives
- Allowances of all types (housing, transport, cost of living)
- Benefits in kind provided by your employer
- Irregular or one-off payments related to your work
Many expats receive generous allowance packages as part of their compensation. It is important to understand that these are generally included in your taxable income, not treated as separate non-taxable benefits.
Special Rules for Non-Residents
Article 11 creates a different tax treatment for certain non-resident payments. Tax is imposed on all amounts paid to non-residents for services performed in Egypt, without the benefit of the EGP 5,000 exempt threshold that residents enjoy. This can make a significant difference in the effective tax burden for short-term contract workers or consultants.
Practical Tips for Expats
- Do not assume your allowances are tax-free. Housing allowances and other benefits provided by your employer are almost certainly included in your taxable income. Ask your employer's HR or finance team for a clear breakdown of your tax-deductible components.
- Keep records of all deductible contributions. If you pay into a social insurance scheme or life insurance policy, retain documentation to support any exemption claim.
- Use the brackets strategically for planning. If you are self-employed or have variable income, understanding the bracket thresholds can help you time income or expenses to manage your tax liability.
- Ask about your employer's withholding obligations. Under Article 14, employers are required to withhold tax at source. Confirm that your employer is correctly calculating and remitting your tax, as errors can create liabilities in your name.
- Review your total compensation package. When negotiating an employment contract in Egypt, factor in the tax treatment of all components, not just the headline salary figure.